What does it take to be considered wealthy in America in 2023? Is it having a million dollars in your bank account? Perhaps two million? Or is it a salary in the high six figures? The concept of wealth is evolving in the United States, with economic fluctuations, inflation, and changing perspectives on financial well-being shaping the perception of affluence.
In different ways, the average American family now feels both wealthier and poorer compared to a few years ago. Median household wealth soared to $192,900 last year, marking a 37% increase since 2019, which is the most significant jump in the history of the Federal Reserve’s Survey of Consumer Finances. This substantial growth in wealth can be attributed to various factors, including government stimulus programs, lockdown-induced savings, and surging values of stocks and real estate.
However, this prosperity is tempered by the harsh realities of inflation, which reached a 40-year high in 2022. In 2023, interest rates have surged to their steepest levels in over two decades, causing many Americans to feel the pinch in their wallets.
Despite these challenges, many Americans still aspire to reach that coveted first million. Yet, the impact of inflation is starkly evident when considering that an item that cost $1 million in 2019 would now cost $1.2 million.
According to a recent survey conducted by the personal finance site LendingTree, a striking 59% of respondents expressed doubts about ever achieving wealth.
Here, we present five key numbers that shed light on what it means to be wealthy in America today:
1. $2.6 million
This figure represents the net worth of the median American family within the upper 10% of income earners. The federal Survey of Consumer Finances, released on October 17, revealed this substantial number. Cristian deRitis, Deputy Chief Economist at Moody’s Analytics, noted, “Generally speaking, we might consider the top 10% of households by income as wealthy.” The surge in household wealth from 2019 to 2022 was remarkable, thanks to government stimulus measures, lockdown-driven savings, and soaring asset values. However, the impact of inflation and rising interest rates has dampened this celebration.
In an online survey conducted by Bankrate and YouGov in June, Americans believed they would need to earn this amount annually to be considered rich. This number is more than six times the $75,203 in average salary earned by full-time workers in 2021, according to the U.S. Census. The survey also found that 72% of Americans felt financially insecure due to persistent inflation and rising interest rates. However, financial experts caution that income alone does not equate to wealth; it depends on an individual’s assets and liabilities.
3. $2.2 million
As per the Charles Schwab Modern Wealth Survey, an American would need a net worth of $2.2 million in 2023 to be considered wealthy. The survey, conducted online with over 1,000 adults in March, asked respondents how much money a person in their area would require to achieve wealth. Surprisingly, this number has decreased from the $2.6 million reported in 2020, indicating that Americans’ perceptions of wealth are evolving and may encompass more than just a monetary figure.
This is the average net worth of Americans who claim to feel wealthy in 2023, as revealed in the same Schwab survey. Almost half of Americans reported feeling wealthy, even though their average household wealth falls significantly short of the $2.2 million they aspire to have. This phenomenon highlights that wealth is not solely about the amount of money one possesses but may also encompass intangibles like well-being, health, and the freedom to spend time with loved ones.
5. $1 million
The term “millionaire” still holds significance in American society. Despite changing economic landscapes, $1 million remains a benchmark of wealth. Matt Schulz, Chief Credit Analyst at LendingTree, emphasized that while it may not guarantee a life of ease comparable to billionaires like Jeff Bezos or Bill Gates, it does represent a level of wealth that many can only dream of attaining. Vanguard defines $1 million in investments as high net worth.
It’s important to remember that the average American family reports a net worth of nearly $1.1 million, but this figure is skewed by the super-rich. The median American family, representing the midpoint, holds $193,000 in net worth, according to the latest Fed survey.
Ultimately, wealth is not just about numbers; it’s a feeling of financial security. As financial advisor Robert Brokamp succinctly puts it, “Can you pay your bills, can you accomplish your goals, and can you withstand a financial shock? If you can answer yes to those, you’re doing pretty well.” In a world of shifting economic conditions, the definition of wealth continues to evolve, encompassing more than just dollars and cents but also encompassing one’s sense of financial well-being and security.